Commercial and multifamily mortgage originations jumped 52 percent in Q1 2026 compared to the same quarter a year earlier, according to the Mortgage Bankers Association — and apartment deals drove a significant share of that volume. If you own or are looking to acquire a 5+ unit building, the lending environment right now is more active than it’s been in years. But the loan products available to you look nothing like what worked on a single-family rental or a duplex.
Five units is the line. Cross it, and you’re in commercial underwriting territory — NOI, DSCR, net worth tests, and a capital stack that spans everything from Fannie Mae agency debt to short-term bridge loans. Here’s how to think through your options.
What You’ll Learn
- Why five units changes how lenders underwrite your deal
- The main loan types for small-to-mid multifamily (5–50 units) and when each makes sense
- 2026 rate ranges across loan types — and what drives the spread
- Key underwriting metrics: DSCR, LTV, occupancy floors, and net worth minimums
- How to prepare your loan package for the fastest execution
Why Five Units Changes Everything
Below five units, lenders use residential underwriting — your personal income, your debt-to-income ratio, your W-2s or tax returns. Cross into five-unit territory, and lenders switch to commercial underwriting. The property’s cash flow becomes the primary credit metric, not your personal income.
That shift matters in both directions. On the upside: if the property performs, you can often qualify without showing personal income documentation at all. On the downside: the standards are stricter in other ways — higher equity requirements, more documentation around property operations, and lender scrutiny of rent rolls, vacancy history, and expense ratios.
The key metrics every 5+ unit lender will underwrite to:
- Debt Service Coverage Ratio (DSCR): Net Operating Income divided by annual debt service. Most lenders want 1.20x–1.25x minimum.
- Loan-to-Value (LTV): Typically 65–80% depending on loan type and property condition. Stabilized, occupied properties get the best LTV.
- Occupancy: Agency programs generally require 90%+ occupancy for 90+ days. Bridge and portfolio lenders are more flexible on occupancy if the business plan holds up.
- Net worth and liquidity: Agency loans require borrower net worth equal to the loan amount and six months of reserves. Portfolio lenders are more flexible.
The Main Loan Types for 5+ Unit Multifamily
There’s no single “multifamily loan” — the right product depends on the property’s stabilization status, your deal size, hold strategy, and what capital markets currently favor. Here are the primary options in 2026.
Agency Loans: Fannie Mae and Freddie Mac
For stabilized properties, agency financing delivers the best rate available. Fannie Mae’s Delegated Underwriting and Servicing (DUS) program and Freddie Mac’s equivalent offerings provide long-term fixed-rate debt with amortization up to 30 years, LTV up to 80% for qualified borrowers, and non-recourse structures on most loans.
Rates in mid-2026 for agency multifamily debt start around 5.30% for well-qualified borrowers in strong markets. DSCR minimums floor at 1.20x. These are the loans your hold-forever investors want to land on.
The borrower bar is real: net worth equal to the loan amount, six months of reserves, and at least two years of multifamily ownership experience with a similarly-sized property. Coming in without an operating track record will steer you toward portfolio or bridge financing first.
Fannie Mae Small Loan Program
For deals in the $1M–$9M range, Fannie Mae’s Small Loan Program is a purpose-built option that many small multifamily investors overlook. It offers five- to 30-year fixed and ARM terms, non-recourse provisions, and assumability — all on properties with 5+ residential units.
Commercial space within the property can’t exceed 35% of net rentable area or contribute more than 20% of effective gross income — a distinction that matters on mixed-use acquisitions. If you meet the stabilization and experience thresholds, this program delivers some of the best risk-adjusted debt in the small multifamily market.
HUD 223(f): Permanent Financing for Stabilized Apartment Properties
HUD’s 223(f) program provides FHA-insured permanent financing for stabilized multifamily properties — up to 85% LTV with 35-year fully amortizing terms. Rates currently run around 5.55%+ depending on the market and property profile.
The trade: HUD execution is slower than agency. Plan on 4–6 months versus 45–60 days for a clean Fannie Mae DUS transaction. For larger deals where the extra leverage (85% vs. 80%) changes the equity picture materially, the longer timeline is usually worth it.
DSCR Loans for Small Multifamily (5–20 Units)
DSCR loan products have expanded meaningfully into small multifamily. For 5–10 unit properties in particular, several non-QM lenders in our network offer products that underwrite primarily on the property’s income — no W-2, no personal income verification — with mechanics similar to single-family DSCR but on commercial classification.
Rates on 5–10 unit DSCR loans in mid-2026 run approximately 7.75%–9.25%, reflecting the smaller balance and the documentation flexibility. LTV typically caps at 70–75% for most files, with 80% available on strong credit profiles and solid occupancy. DSCR minimums hover around 1.20x–1.25x.
For a deeper look at how DSCR underwriting works on smaller multifamily deals, see our guide to multifamily DSCR loans.
Bank and Portfolio Loans
Community banks and credit unions hold a meaningful share of the small multifamily market. They underwrite in-house, keep loans on their balance sheets, and can flex on borrower profile, property condition, and deal structure in ways agencies can’t. Rates run 6.5%–8.5% with 25-year amortization and 5- or 10-year balloons. LTV is typically 65–75%, DSCR minimums around 1.20x–1.25x.
The relationship matters here more than anywhere else. A borrower who has closed two or three deals with a local community bank will get terms a cold inquiry won’t.
Bridge Loans for Value-Add and Lease-Up Deals
If the property isn’t stabilized — occupancy is low, units need renovation, or you’re executing a repositioning — bridge financing is usually the entry point. Short-term loans, typically 12–24 months with extension options, let you acquire or recapitalize the asset, execute the business plan, and refinance into permanent debt once the property qualifies.
We typically see bridge rates in the 8.5%–11% range for small multifamily, interest-only, at 65–75% of purchase price (with some deals reaching 80% of as-stabilized value). The exit to permanent financing is planned from day one. For more on how bridge works in practice, see how bridge loans work for real estate investors.
CMBS Loans
CMBS (conduit) loans are pooled and sold into the bond market. They’re more flexible on borrower net worth than agency programs — often accepting 25–40% of the loan amount versus the full 100% Fannie requires — but loan terms are fixed and non-modifiable once securitized. Useful for investors who need more flexibility on sponsorship requirements or are financing larger or more complex assets.
2026 Rate Ranges by Loan Type
Rates as of mid-2026. All pricing is indicative — actual terms depend on credit, LTV, property location, and market conditions at time of application.
| Loan Type | Rate Range | Max LTV | Min DSCR | Term |
|---|---|---|---|---|
| Fannie Mae / Freddie Mac DUS | 5.30%–6.50% | 80% | 1.20x | 5–30 yr fixed |
| Fannie Mae Small Loan ($1M–$9M) | 5.30%–6.75% | 80% | 1.20x | 5–30 yr fixed |
| HUD 223(f) | 5.55%+ | 85% | 1.17x | 35 yr fixed |
| Bank / Portfolio | 6.50%–8.50% | 75% | 1.25x | 5–10 yr balloon |
| DSCR Non-QM (5–10 units) | 7.75%–9.25% | 75–80% | 1.20x | 30 yr am, 5–10 yr fixed |
| Bridge / Value-Add | 8.50%–11.00% | 75–80% AS | Varies | 12–24 mo IO |
| CMBS Conduit | 6.00%–7.50% | 75% | 1.25x | 5–10 yr balloon |
How Lenders Underwrite a 5+ Unit Deal
When you submit a 5+ unit deal for financing, lenders work through a predictable checklist. Understanding it upfront lets you package your deal to minimize back-and-forth.
Net Operating Income (NOI). The lender calculates NOI as gross rents minus vacancy (usually 5–10%) minus operating expenses — taxes, insurance, utilities, management, maintenance, and reserves. They’ll typically stress-test rents against market data rather than accepting your proforma at face value.
DSCR test. NOI divided by annual debt service. Most lenders floor at 1.20x–1.25x. A 1.25x DSCR means the property generates 25 cents of cushion for every dollar of debt service — enough to absorb a unit or two of turnover without going into default.
Borrower experience and net worth. Agency programs have explicit minimums — net worth equal to the loan amount, demonstrated multifamily experience. Portfolio lenders weigh this more subjectively. Coming in with a track record of operating similar assets strengthens your position regardless of loan type.
Occupancy history. A current rent roll isn’t enough for most agency lenders. They want to see 90%+ occupancy sustained for at least 90 days. Recently renovated or lease-up properties need time to season before qualifying for agency debt.
Reserves. Most lenders require 6–12 months of debt service in liquid reserves at closing. Non-QM DSCR lenders may accept 3–6 months depending on LTV and credit profile.
From a Recent Deal
From a recent deal: I placed a 14-unit apartment building in the Tampa market last year where the sponsor came to me after being declined by two regional banks — both cited a DSCR of 1.18x, just under their 1.20x floor. The property was well-maintained, 96% occupied, and the borrower had owned comparable assets for seven years. We ran it through a portfolio lender in our network that underwrites on trailing 12-month actual NOI rather than a stressed rent schedule. That methodology brought the underwritten DSCR to 1.23x. We closed at 72% LTV on a 7-year balloon with 25-year amortization. The lesson: the DSCR floor isn’t always the same number across lenders, and the NOI calculation methodology varies enough that a deal declined at one institution can close at another.
Looking at a multifamily acquisition or refinance? We structure these deals nationally across agency, bank, CMBS, and bridge. Schedule a 15-minute call →
How to Prepare Your Loan Package
The cleaner your package, the faster and cheaper your execution. Here’s what most lenders will ask for on a 5+ unit deal:
- Current rent roll with unit-by-unit breakdown (unit number, square footage, lease term, monthly rent)
- 12–24 months of operating statements (T-12 or T-24 income and expense)
- Current property tax statement
- Most recent insurance declarations page
- Personal financial statement for each principal (recourse deals) or net worth statement (non-recourse)
- Property photos (interior and exterior)
- Borrower experience summary — especially important for agency loan applications
If you’re buying, you’ll also need the executed purchase contract, a survey, and Phase I environmental (standard on commercial transactions). For a refinance, have the current mortgage statement handy — the lender will order a new appraisal, but the existing one provides useful context.
Borrowers who submit a clean executive summary upfront — property overview, rent roll summary, business plan, and financials — consistently get faster LOIs and better initial terms than borrowers who drip documents over two weeks.
Sunbelt markets like Tampa, Phoenix, Charlotte, and Raleigh continue to see strong multifamily demand and favorable agency underwriting. See our breakdown of Sunbelt multifamily investment markets in 2026 for market-by-market context.
Also worth reviewing: our breakdown of DSCR loan requirements covers the documentation trade-offs for investors weighing the non-QM route versus a conventional commercial program.
Frequently Asked Questions
What is the minimum DSCR for a 5+ unit multifamily loan?
Most lenders require 1.20x–1.25x. Agency programs (Fannie Mae, Freddie Mac) floor at 1.20x. Community bank and portfolio lenders often want 1.25x. HUD 223(f) has a lower floor — around 1.17x — for some property types. Non-QM DSCR products for 5–10 unit buildings generally require 1.20x–1.25x as well.
Can I get a multifamily loan without showing W-2 income?
Yes. Five-plus unit multifamily loans underwrite primarily on the property’s cash flow, not the borrower’s personal income. Agency loans qualify on DSCR rather than personal DTI. Non-QM DSCR loans for small multifamily require no personal income documentation. Bank loans may review personal financials for recourse deals, but the primary underwrite is still on the property.
How much do I need to put down on a 5+ unit apartment building?
It depends on the product. Agency loans allow up to 80% LTV (20% down on stabilized deals). HUD goes to 85% LTV (15% down). Portfolio and bank loans typically require 25–35% down. Non-QM DSCR for small multifamily usually requires 25–30% down. Bridge loans for value-add acquisitions typically require 20–35% depending on the lender and business plan.
What makes a property stabilized for agency multifamily financing?
Fannie Mae and Freddie Mac generally require 90% or higher occupancy sustained for at least 90 days prior to loan application. Properties under renovation or in lease-up need bridge financing first, then a refinance into agency once stabilized.
How long does a multifamily loan take to close?
Timeline varies by product. Bank and portfolio loans can close in 30–45 days for clean files. Agency loans typically run 45–75 days. HUD 223(f) takes 4–6 months minimum. Non-QM DSCR loans for small multifamily can close in 20–30 days. Bridge loans can close in 15–30 days for straightforward deals.
Ready to Finance Your Multifamily Deal?
We’re a commercial mortgage brokerage serving investors and developers nationally, with active lender relationships across agency, bank, CMBS, debt fund, and bridge capital for 5+ unit multifamily properties. Send us your scenario — we’ll respond within one business day with realistic terms.
This article is for informational purposes only and does not constitute financial, legal, or tax advice. Loan terms, rates, and availability vary by borrower, property, and market conditions. Consult Willowbrook Capital for scenario-specific guidance.
